Cooperative Movement and Cooperative

Societies in India
The Cooperative Societies can be defined as an autonomous association of
persons united voluntarily to meet their common economic, social, and
cultural needs and aspirations through a jointly-owned and democratically-
controlled enterprise. India is an agricultural country and laid the foundation
of World’s biggest cooperative movement in the world.  Here, we are giving a
brief summary of the Cooperative Movement and Cooperative Societies in
India for general awareness.
SHAKEEL ANWAR
NOV 23, 2017 17:00 IST

Cooperative Movement and Cooperative Societies in India

The Cooperative Societies can be defined as an autonomous association of

persons united voluntarily to meet their common economic, social, and
cultural needs and aspirations through a jointly-owned and democratically-
controlled enterprise". India is an agricultural country and laid the
foundation of World’s biggest cooperative movement in the world.  The need
for profitability is balanced by the needs of the members and the wider
interest of the community, the Cooperative Movement was started by the
weaker sections of society for protecting its members from the clutches of
profit hungry businessmen. Here, we are giving a brief summary of the
Cooperative Movement and Cooperative Societies in India for general
awareness.

Cooperative Movements in India

The Cooperative Movements in India can be studied into two phases:

1. Co-operative Movement in pre-Independence era

2. Co-operative Movement in post-Independence era

Co-operative Movement in pre-Independence era

The term cooperative Societies came into existence when the farmers of
Poona and Ahmednagar spearheaded an agitation against the money lenders
who were charging exorbitant rates of interest. Hence, British government
came forward and passed three acts- the Deccan Agriculture Relief Act
(1879), the Land Improvement Loan Act (1883) and the Agriculturists Loan
Act (1884).

But Cooperative move came with structure and shape when British
enactment of the Cooperative Credit Societies Act, 1904. In 1919,
cooperation became a provincial subject and the provinces were authorised
to make their own cooperative laws under the Montague-Chelmsford
Reforms. This categorization carried on to Government of India Act, 1935.
In 1942, Government of British India enacted the Multi-Unit Cooperative
Societies Act to cover Cooperative Societies with membership from more
than one province.
Timeline of Indian Freedom Movement from 1885 to 1947
Co-operative Movement in post-Independence era
India's first Prime Minister Pt. Jawaharlal Nehru had strong faith in the
cooperative movement. In his speech in international seminar on
cooperative leadership in South-East Asia he had said “But my outlook at
present is not the outlook of spreading the cooperative movement gradually,
progressively, as it has done. My outlook is to convulse India with the
Cooperative Movement or rather with cooperation to make it, broadly
speaking, the basic activity of India, in every village as well as elsewhere;
and finally, indeed, to make the cooperative approach the common thinking
of India....Therefore, the whole future of India really depends on the success
of this approach of ours to these vast numbers, hundreds of millions of
people".
Hence, after independence cooperatives became an integral part of Five-Year
Plans.

1. In 1958, the National Development Council (NDC) had recommended

a national policy on cooperatives and also for training of personnel's and
setting up of Co-operative Marketing Societies.
Agriculture in India
2. In 1984, Parliament of India enacted the Multi-State Cooperative
Societies Act to remove the plethora of different laws governing the same
types of societies.
3. The most important success stories lays behind the success of White
Revolutionwhich made the country the world's largest producer of milk and
milk products; and Green Revolution and the conversion of villages into
model villages have assumed great importance in the wake of the Green
Revolution.
4. Government of India announced a National Policy on Co- operatives in
2002. The ultimate objective of the National Policy is to-
(a) Provide support for promotion and development of cooperatives

(b) Reduction of regional imbalances

(c)Strengthening of cooperative education, training and human resource

development

Cooperative Societies in India

Agro-Based Industries in India

Importance of Cooperative sector for India
The Cooperatives play very important role in India because it is an
organization for the poor, illiterate and unskilled people. The importance of
Cooperative sector for India is given below:

1.  It provides agricultural credits and funds where state and private sectors
have not been able to do very much.

2. It provides strategic inputs for the agricultural-sector; consumer societies

meet their consumption requirements at concessional rates.

3. It helps to overcome the constraints of agricultural development.

How the pre-monsoon rain became the boon of India's markets and
Farmers!
Provisions of Indian Constitution
1. Directive Principles of State Policy enshrines under article 43 that-
Living wage, etc., for workers. The State shall endeavour to secure, by
suitable legislation or economic organisation or in any other way, to all
workers, agricultural, industrial or otherwise, work, a living wage, conditions
of work ensuring a decent standard of life and full enjoyment of leisure and
social and cultural opportunities and, in particular, the State shall endeavour
to promote cottage industries on an individual or co-operative basis in rural
areas.
2. Right to form cooperatives can also be construed as a Fundamental
Right, Article 14– (Right to Equality) and Article 19(1)(c) as ‘Right to
form Associations or Unions.
Committee related to the Cooperative Movements in India
1. All-India Rural Credit Survey Committee Report (1954)
2. Chaudhary Brahm Prakash Committee (which proposed a model
law) (1990)
3. Mirdha Committee (1996)
4. Jagdish Kapoor Committee (2000)
5. Vikhe Patil Committee (2001)
6. V. S. Vyas Committee (2001 and 2004)
Hence, we can say that the Cooperatives Movement was awakening
movement for peasants and farmers as well as agriculture and its allied
activities. It has immense potential to deliver goods and services in areas
where the government and private sector failed to reach.

Laws Applicable to Co-Operative Society

The Cooperative Societies Act, 1912 expanded the sphere of cooperation
between its members and provided for supervision by central organization. A
cooperative society, which has its object the promotion of the economic
interests of its members in accordance with the co-operative principles may be
registered with limited or unlimited liability by filing application to the
registering authority with requisite documents to be submitted by them

A Co-operative Society has to conduct itself  as  per the following listed below:

1. Co-operative Societies Act under which the same is registered whether it be

under state Act or Cental Act.
2. Co-operative Societies rules made there under whether it be central or state rules
3. Bye-laws approved by the registrar at the time of registration and amendments
made from time to time and approved by the registrar, these bye-laws have to be
 formed by the concerned members themselves and present it to the registration
authority for its approval.
4. Notification and Orders by the concerned Government

The following steps have to be followed while

forming a Co-operative society, they are

Step 1: Ten Individuals together who are desirous of forming a

Society

To form a society, law mandates that 10 members minimum must show

intention to be part of the society having same aim and objective to be achieved
through the society for their mutual benefit and thereby be desirous to be part
of it.

Step 2: Provisional Committee to select Chief Promoter

Once a group of individuals have a desire to form a society the next step should
be there must be a provisional committee of which everyone is part of and all of
them should by mutual consent or by majority whichever their prefer must
choose a person who will be a chief promoter of the society which is going to be
formed by them.

Step 3: A Name for the Society has to be selected

Thereafter once a chief promoter is selected by set of individuals among them,

they have to select a name for the co-operative society which they wish to form

Step 4: Application has to be made to the Registration Authority

Once the name of the society is selected by the members then they have to
make a application to the registration authority stating that they have a
intention to form a society and the name of the society has to be given to the
authority for its approval and registering authority has to confirm that name is
in conformity with laws and issue a confirmation certificate to the members.
Then when the members get their name approval from the authority it is valid
for 3 months from the date of approval.

Step 5: entrance fees and share capital

Thereafter once name approval comes from the concerned authority, the
entrance fee and the share capital must be collected from the concerned
prospective members to meet the statutory requirements under law and it can
be prescribed by the members themselves or society act mandates certain fees
to be paid by them.

Step 6: Bank Account

Thereafter once the prescribed fee and share capital is collect from the
prospective members, then as per the directions of the registering authority
promoter has to open a bank account in the name of the society and deposit the
said fees and share capital in that account and a certificate has to be obtained
from the bank to that effect

Step 7: Application for registration

Once the bank formalities are completed then the promoter has to apply for the
society formation to the registration authority and it has to be accompanied
with set of documents, they are

 Form No. A in quadruplicate signed by 90% of the promoter members

1. List of promoter members
2. Bank Certificate
3.  Detailed explanation of working of the society.
4.  Four copies of proposed bye-laws of the society.
5. Proof of payment of registration charges.
6. other documents such as affidavits, indemnity bonds, any documents
specified by the Registrar also have to be submitted.

All these documents have to be submitted at the time of applying for

registration of the society to the registering authority and the authority after it
is satisfied with the documents submitted to it has to apply its mind to whether
or not to register the said society.

Step 8: Registrar has to acknowledge

After the submission of the said documents has mentioned in step 7, the
registrar of that municipal ward has to enter the particulars in the book called
the “register of Application” which is generally specified in form B and give it a
serial number to the application. Thereafter the registrar has to issue a receipt
to that effect and give it to prospective members to know the status of the
application when it is pending.

Then the registrar after perusal of the records submitted to him/her has to
make a decision whether has to issue a certificate of registration or not and if
there are any discrepancies noticed then he/she has to inform the members of
the same and get it rectified if any.

Step 9: Registration

Last step is that the registering authority after being satisfied with the
documents meeting the legal requirements will notify the registration of the
society in the official gazette mentioned by the state or central government and
should issue the registration certificate of the society and give it to the
members of the society.

Conclusion
In India, Co-operative Societies were regarded as ideal instruments to motivate
the people to come together and help themselves in the process of eliminating
the unscrupulous middlemen making a huge profit at the expense of the
society.

The main guiding factor if an individual or group of individuals want to form a

society must be whether all the concerned members have common goal to
achieve or not, it is important factor because only when they share common
desire or intention then only society is desirable otherwise the whole purpose of
forming a society will be defeated.

Societies like any other business structure come with certain advantages and
disadvantages, they are:

Advantages
 Cooperative stores supply quality goods unlike other shops wherein adulterated
foods maybe given to its consumers and thus saved them from adulteration and
other malpractices.
 As consumers or members of the society are the owners and managers of such
stores, genuine requirements of the majority of consumers can be met. In other
words, goods required by a majority of the customers or members of the society
are always dealt by such stores.
 Cooperative societies are an important form of democratic business enterprise
because ownership is not vested in one person completely so as a result, no
single group can secure control over the organisation.

Disadvantages
 It only caters to the needs of small and medium-income groups so when there are
large group with higher economic interest then it is preferable to choose another
business model.
  There is much dependence on the honesty, integrity and loyalty of members and
workers and once there are trust issues between the members it is hard to
transact business thereafter.
 It is limited to certain objectives hence profits are minimal.
 Management of society usually rests in the hands of people with less managerial
experience due to which society will suffer and many do not invest in hiring
professionals to handle the society due to lack of funds or interest so henceforth
growth of the society maybe put to stake by its own members.

Co-operative societies or Co-ops are a worldwide phenomenon with various definitions and
diverse structures. Essentially, they are an association of users or firms or households in
pursuit of economic, social or cultural objectives, applying to themselves the rules of joint
ownership and democracy, aiming to serve its members and the community as a whole.
They are a voluntary association that replace capitalism with co-operation, listen to their
members’ needs, are non-discriminatory, arrive at decisions through discussions and follow
the ideals of self-help and mutual help.

Co-operatives exist in sectors such as retail, banking, housing, marketing, agriculture,

manufacturing, purchasing, employment, among others. Some of the most renowned co-
operatives in India are Amul, Shree Mahila Gruha Udyog (Lijjat Papad), KRIBHCO, and
Indian Farmers Fertiliser Cooperative (IFFCO – which is also one of the largest co-
operatives in the world).

What are the types of co-operatives in India?

Let’s explore the six major types of co-operatives that exist in India.

1. Consumer Cooperative Society

These societies are primarily for consumers who wish to buy household goods at lower
prices. The society buys goods or products in bulk amounts directly from the producer on
wholesale rates and sells them to the members, thus eliminating the need for a middleman.
The purchased goods are sold to members and non-members in cash. Capital is raised by
issuing low denominational shares to the members who also get dividends on the shares.
Consumer co-operatives do not use advertising but rely on word-of-mouth. They ensure a
regular supply of goods at reasonable rates. They set up stores or outlets to sell goods and
avail huge trade discounts from producers. Some of the best examples of a consumer co-
operative society are Super Bazar and Apna Bazar.

2. Producer Cooperative Society

Also known as industrial co-operatives, these types of societies look out for the small-scale
producers in a cut-throat market scenario. Production and distribution are handled from
within the co-operative. These producers could be farmers, ayurvedic herbal medicine
producers, organic produce sellers, handicraft or handloom producers, artisans, etc. Raw
materials, ingredients, tools, processing units, etc. needed for the manufacturing or
producing the goods are obtained by the members directly, provided to the producers and
the final output is distributed to the buyers/non-members without a middle link. Producers
pool in their resources, increase production volumes and minimise risk in the face of the
competitive capitalistic markets. Best examples are dairy, fish farmers, weavers and
artisans and tribal co-operatives.

3. Co-operative Credit Societies

These are urban and rural financial societies that provide loans to members at low rates of
interest, protecting the members from massive debts to traditional moneylending agencies.
They serve a basic but highly personalised banking role in a sense. They have deposit
schemes in forms of saving accounts, FD, RD, pension schemes, etc. The money procured
is then given on loans to members as personal loans, agricultural loans, housing or vehicle
loan, etc. These societies are regularly aided by state and national government subsidies
and funding. Some examples are Teachers Co-op Credit society, State Electric Board
Employee Co-op Credit Society.

4. Marketing Cooperative Society

Mostly for the benefit of farmers, these societies function to market the produce profitably at
the best possible prices, increase the bargaining strength of the farmers and protect them
from the trials of individual selling and market exploitation. The profits are distributed on the
basis of the contribution of produce made. They also educate the farmers on market prices,
stabilise supply against demand, help them get loans, and help with grading, pooling,
processing and procurement of produce and provide safe storage and reliable
transportation facilities. Some good examples are Milk Co-operatives in Gujarat, Maha
Grape, Cotton Marketing Co-ops.
5. Housing Cooperative Society
Housing co-ops are a type of society that provides affordable housing to the middle and
low-income groups. One becomes a member by purchasing shares in the co-operative.
Instead of owning the real estate, the members own a share in the entire corporation, which
in turn gives them a house to reside in. Such societies are commonly found in urban and
semi-urban cities. They construct the residences or flats and provide them to the members
to live in and collect the money in instalments. In other cases, they provide the land to the
members who themselves construct their own residences.

6. Co-operative Farming Societies

The financially challenged farmer may not be able to maximise his agricultural output
individually and earn optimum profits. Farming co-ops are a way for farmers to retain the
right to their land, yet pool together and consolidate land, livestock and equipment while
earning a share in the total output as per the contribution made. In better farming co-ops,
members co-operate for pre-sowing, seeds, fertilisers and equipment, and joint selling, but
cultivate the land separately. In joint farming, they pool in the land as well. Co-op tenant
farming is the type in which the society leases the land to the farmers and collects the rent.
In collective farming co-ops, farmers are members for life and cannot remove their land but
can transfer the land rights to another.

Why do co-operative societies matter?

Every Indian national should acknowledge the worth and significance of co-operative
societies since they are an important contributor to economic equality and welfare. Even
though they are not the predominant public or private financial organizations, a flourishing
network of co-operative societies improves the standard of living of the weaker and middle-
income sectors of the society as agents of change and reformation.

They provide an economic model with a higher level of entrepreneurial or social

sustainability and often work as pressure groups to voice the views of its members in a
larger market. Being a part of a co-op improves your creditworthiness as a producer as well
as a consumer. They are easy to join, ensure equitable distribution of profits, prioritise
welfare over individual profits, are stable in their functioning and output, and receive a
substantial amount of government support. The spirit of co-operation and unity in chasing
common interests is the driving force behind co-ops. In a growing democracy, they are the
symbol of meritorious collectivism.